Establishment of the new funds will be a central point of the Minister for Finance's budget speech. File photograph: EPA, including one to support future State investment and a second to be invested for the long term, with the State finances benefiting from the interest earned.
The two funds, which will be given legislative backing, will be one of the key issues covered in the budget. It will outline a permanent package of €6.4 billion in tax and spending changes. There will also be €2.3 billion to €2.4 billion in once-off cost-of-living supports for households. Adding in an additional €250 million for capital spending, already announced, brings the total budget package to about €9 billion, compared to €11 billion last year.
The establishment of the new funds will be a central point of Mr McGrath’s speech. The first — the Infrastructure, Climate and Nature Fund- will be capped at €14 billion. About €2 billion will be paid in each year from the exchequer. It will be made available to support State investment in case the public finances are put under pressure from a slowing economy in the years to come.
Budget 2024 talks: Childcare fees cut by 25%, €450 energy credit, mortgage tax break up to €1,250 among measures consideredBudget 2024, by a renter, a landlord, a teacher and more: ‘We are the squeezed middle’A second investment fund will be established with the intention to allow it to grow over time to a larger amount than the €14 billion cap on the first fund.
A key motivation for the establishment of the two funds is the unpredictability of corporate tax receipts in the years ahead. The pre-budget White Paper, published on Saturday, forecast a €750 million shortfall in these revenues this year, now expected to come in at €23.5 billion. It did anticipate some growth again next year to €24.5 billion, but the 2023 figures will be the first shortfall in this revenue source for many years, after a period of extraordinary growth.